Nepal Rastra Bank to Withdraw Rs 45 Billion from Banking System

Kathmandu. Nepal Rastra Bank is withdrawing Rs 45 billion from the banking system on Friday. The central bank is withdrawing the said amount through a deposit collection instrument auction for 42 days as excess liquidity remains in the financial system. Currently, total deposits have reached over Rs 77 trillion. The central bank has been continuously managing liquidity through deposit collection instruments and standing deposit facilities to manage excess liquidity and interest rates in the system. Only 'A', 'B', and 'C' class banks and financial institutions licensed by the central bank will be able to participate in this auction process. When allocating the amount, priority will be given to counterparties who bid at the lowest rate based on the interest rate they bid. The auction is being conducted through the online purchase system today as deposits have increased. The central bank has stated that the interest rate for this will also be determined through auction. The principal and interest of the deposits collected today will be paid on Ashad 12, 2083. Interested institutions can bid for a minimum of Rs 100 million and up to the total amount called for, divisible by Rs 50 million. According to the central bank's open market operations procedure, there is a provision to use deposit collection instruments for up to 6 months to manage excess liquidity of a long-term nature in the market. Based on the same legal provision, the central bank has been using such instruments from time to time.